The lofty rhetoric of championing the Global South in the realm of trade issues faces an ugly test, both domestically and at an upcoming trade summit. The government is now embroiled in a fierce negotiating battle with farmers, who have presented a dozen demands, particularly focusing on guaranteeing minimum support prices (MSP) and halting agri-corporatisation.
Ironically, on a day when the Narendra Modi government bestowed the highest award of the land, the Bharat Ratna, upon the late M.S. Swaminathan, farmers demanded the implementation of reforms he had advocated to uplift millions of struggling farmers across the country.
The farmers’ demands, both symbolically and practically, mirror the concerns of developing countries in the global farm trade. If the long-standing demands of the Indian farmers are seemingly buried under one pretext or the other, then, how can the Modi government effectively press its much-delayed demand for a permanent solution for public stockholding (PSH) programmes for food security, in which the MSP is a critical component.
Come February 26, more than 1,000 delegations will gather in Abu Dhabi for the World Trade Organisation’s biennial trade ministerial conference. The 13th ministerial conference (MC 13) of the trade body will decide whether there is any future for the much-fragmented multilateral trading system. It will also indicate whether the demands of the developing countries in agriculture will ever be met.
In a letter sent to trade ministers on January 31, the WTO’s Director-General, Ngozi Okonjo-Iweala, who carries a dual-passport of Nigeria and the United States, writes: “Over 50 countries will be undergoing elections, including in very large democracies. People around the world are feeling anxious about their cost of living, and about the future. The WTO must be cognizant of the challenges, and we must do our part to contribute to reinvigorating growth and opportunities for people everywhere. MC13 presents an immediate opportunity for ministers to show the world that it can get results on issues that matter for people.”
However, behind closed doors, there appears to be a sustained push on plurilateral issues that are being pushed by the US, the European Union, and China, without any prior multilateral consensus.
One of the issues that concerns a large majority of people in the world is food security and the governments’ ability to guarantee the provision of food. And there is certainly no bigger issue than providing bread on the table for hundreds of millions of starving people.
This can only be done by changing existing global trade rules that were negotiated at the height of the globalisation in the mid-80s through the Uruguay Round commitments. These rules are proven to be asymmetrical and unfair to developing countries through numerous studies.
Despite the urgency of the matter, the US, which continues to be the biggest beneficiary of the Uruguay Round commitments, along with the EU, Japan, Switzerland, Norway, and Canada among others are prepared to go to any extent to block attempts to rewrite those rules.
A permanent solution
Against this backdrop, the constant claim of leading the Global South faces a test not just at home but abroad as well. It will become clear whether India fights for its farmers or yields ground to Uncle Sam on one of the most crucial issues for poor farmers in developing countries.
At the heart of the issue lies the pursuit of a permanent solution for public stockholding programmes for food security purposes in developing countries. Washington remains violently opposed to the permanent solution as its powerful farm lobbies are unhappy with the existing peace clause or interim solution that was decided in 2013, which was later reinforced in 2014.
It was decided that the peace clause for exempting public stockholding programmes from legal scrutiny will continue as long as countries agreed to a permanent solution which ought to have been concluded in 2015 and then deferred to 2017. The US, however, chose to block any decision for the past eight years.
During discussions on a draft text issued by the chair from Turkey on January 29, the US, along with supporters like Paraguay, proposed deleting the option to conclude an outcome on the permanent solution at Abu Dhabi. Instead, it suggested continuing discussions on several issues in the agriculture dossier until the WTO’s 14th ministerial conference in Cameroon in 2026
The US reckons that the peace clause has enabled India to become one of the largest exporters of rice, an item on which India has also exceeded its de minimis limit of 10% during 2021 and 2022.
[Under WTO rules, member countries are required to limit the amount of domestic support they provide to their agricultural producers, as excessive subsidies can distort international trade. The de minimis level represents a threshold below which subsidies are considered insignificant and do not count toward the total allowable support.]
However, the PSH has helped India in addressing the provision of cereals like rice and wheat, which are procured through MSP and sold below MSP at lower prices. Without such a scheme, the poverty levels in India, which are among the highest, would have shot through the roof.
The US, Australia, and Brazil among others liken the PSH programme to a market price support scheme and insist that it is a breach of New Delhi’s commitments. However, the calculation of the market price support programmes in the case of India is flawed as they are based on static assumptions like external reference price (ERP) based on 1986-88 prices. Umpteen attempts to change the ERP, a demand developing countries have raised time and time again since 2015, are blocked by the US.
Many developing countries, particularly members of the G33 countries led by Indonesia and the Africa Group, have repeatedly demanded a permanent solution. However, they look up to India to do the heavy lifting because of the allegedly political/diplomatic/negotiating arm-twisting that goes behind the ministerial conferences. It has been seemingly established that the powerful members and the WTO Secretariat ensure that issues raised by the developing countries are often pushed to the back burner.
The groundwork for a permanent solution for PSH programmes for food security purposes has been laid ably by the Indian negotiators, who finally succeeded in including the first option in the chair’s draft text for the permanent solution.
But, it now depends on the political masters. Piyush Goyal, the commerce minister, is currently negotiating with farmers back home to ensure that it’s not just bloated rhetoric championing the Global South, but concrete outcomes echoed through such pronouncements.
So far, the Narendra Modi government’s track record for accomplishing its trade commitments appears somewhat appalling. The current finance minister, who was the commerce minister in 2015, has surrendered the ground to the US without a fight. With elections to be held in the next two-and-half months, it would be interesting to see if the current regime stands for its farmers or leaves them high and dry both domestically and in Abu Dhabi.